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On Warehousing Problems

Author

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  • William Prager

    (Brown University, Providence, Rhode Island)

Abstract

An entrepreneur operates a warehouse of a given capacity for storing a seasonal product. At the beginning of each of a number of consecutive periods (“months”), the product can be bought for storage at a known cost per unit or sold from storage at a known quantity-dependent price per unit. For a given month, the selling price per unit is supposed to have a constant value up to a certain number of units and a lesser constant value for additional units sold. What pattern of buying, storing, and selling should the entrepreneur adopt to maximize his profit?In this paper, a warehousing problem of this kind is shown to be a generalized Hitchcock distribution problem with mixed boundary conditions and non-positive flows along certain routes. This fact suggests a simple procedure for solving problems of this kind. The procedure readily allows the inclusion of storage costs, which were neglected by Charnes and Cooper.

Suggested Citation

  • William Prager, 1957. "On Warehousing Problems," Operations Research, INFORMS, vol. 5(4), pages 504-512, August.
    • Handle: RePEc:inm:oropre:v:5:y:1957:i:4:p:504-512
    DOI: 10.1287/opre.5.4.504
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    Cited by:

    1. Owen Q. Wu & Derek D. Wang & Zhenwei Qin, 2012. "Seasonal Energy Storage Operations with Limited Flexibility: The Price-Adjusted Rolling Intrinsic Policy," Manufacturing & Service Operations Management, INFORMS, vol. 14(3), pages 455-471, July.

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